by The import trade is referred to goods and services purchased into one nation from another. The word “import” originates from the word “port” considering the fact that the products are frequently transported via ship to foreign countries. Similar to exports, imports are also the backbone of international trade. Here, if the expense of a country’s imports is more than the value of its exports than the country has a negative balance of trade (BOT), which is also known as a trade deficit.
Every country import goods and services that the domestic country cannot manufacture, maybe because the country cannot produce effectively or cheaply like another exporting country. Few countries sometimes also import commodities and raw materials which are not available on their premises. For instance, many nations import oil they cannot manufacture it locally or cannot provide sufficient to meet the demand.
Objectives of Import Trade
- To Speed Up Industrialization
Developing countries import scarce raw materials, capital goods and advanced technology required for rapid industrial development.
- To Meet Domestic Demand
The goods which are in demand but are not available in the country are imported.
- To Overcome Natural Disasters
During drought, flood, earthquake and other natural calamities country import food grains and other essential commodities to prevent starvation.
- To Improve Standard of Living
Imports enable consumers in the home country to enjoy a wide variety of products of high quality.
It helps in improving the standard of living of masses.
- To Ensure National Defence
The importer must get the receipt of credit from his concerned bank and send it to the foreign supplier.
Important Steps Involved in a Typical Import Transaction
- Trade Enquiry and Sending Quotations
- The domestic buyer who wishes to buy the goods from the other country sends an inquiry relating to price, desired quality, terms, and conditions for the export of goods.
- The exporter sends a reply to the inquiry in the form of ‘Quotation’.
- The quotation is also known as ‘Proforma Invoice’ which contains information about the selling price, quantity, quality, mode of delivery, etc.
- Procurement of Import License
Goods can be imported only upon the license, the importer requires to obtain an import license.
- Obtaining Foreign Exchange
- The overseas supplier asks payment in a foreign currency.
- Payment requires the exchange of Indian currency into foreign currency.
- In India, transaction related to foreign exchange are governed by Reserve Bank of India (RBI) under the Exchange Control Department.
- Placing Order or Indent
After the receipt of the ‘Quotation’, if the prospective buyer finds the information suitable to him, he places the ‘Order/Indent’ for the import of goods.
- Obtaining Letter of Credit
The importer must get the receipt of credit from his concerned bank and send it to the foreign supplier.
- Arrangement of Finance
The importer makes the finance settlements in advance to remunerate to the exporter when the shipment arrives at the destination.
- Receipt of Shipment Advice
- After storing the consignment on the ship, the foreign supplier sends the shipment advice to the importer.
- The shipment advice includes data about the shipment of products such as:
- Invoice number
- The landing or airways bill date and number
- Name of the ship with date
- Port or Destination of export
- Classification of goods and quantity
- Date of the sailing of the vessel.
- Arrival of Goods
The overseas supplier dispatches the Goods as per the contract.
- Customs Clearance and Release of Goods
- In India, all the imported goods have to have a clearance from customs after they pass the Indian borders.
- When the ship arrives at the port, the importer has to obtain a delivery order/endorsement for delivery on the back of the bill of lading from the concerned shipping company.
